The most significant factor reducing the capacity of radio systems is the limited frequency spectrum available. The capacity of a radio system is thus dependent on how efficiently the radio frequencies allocated to the system can be utilized. In cellular radio networks, enhanced utilization of radio frequencies is based on frequency reuse; the same frequency is reused at several locations that are sufficiently spaced apart, which affords a vast increase in system capacity. This is counteracted by increased complexity in the network as well as in the mobile units which must be capable of selecting a base station from among several possible base stations. For example, if the same frequency is reused in every ninth cell, the spectral allocation of N frequencies permits the use of N/9 carriers simultaneously in any cell. Diminishing the cell size or reducing the distance between cells using the same frequency will enhance capacity on the one hand, but also increases co-channel interference. Therefore, selection of the reuse factor is often a compromise between co-channel interference and the traffic carrying capacity of the system.
Since the frequency spectrum allocated to a cellular radio network is fixed and the number of subscribers is rapidly increasing, efficient use of the allocated frequency spectrum is vital to any network operator. Hence, various features increasing the traffic carrying capacity in the cellular network will provide much-needed relief to operators, particularly in crowded urban areas. Radio network evolution towards high-capacity radio networks has the following main alternatives: increasing the number of channels, splitting the cells (small cells), microcellular networks, multi-layered networks, underlay-overlay networks, and other capacity enhancement concepts, such as half-rate channels, frequency hopping, and power control. In the following, these alternatives will be described in more detail.